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HUF fund transfer

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ashok oza

292 Points Posted on 01 November 2022

Is there a cap on how much fund can be transferred in a financial year, to HUF account, by Karta and/or a coparsner (Spouse, children) from individual savings ?? Are there any Tax implications involved, if such a fund transfer is effected??🤔

Replies (6)

Quick Summary

This discussion clarifies that there's no specific monetary cap on transferring funds into a Hindu Undivided Family (HUF) account by the Karta or coparceners from their individual savings. However, any income generated from these transferred funds will be clubbed with the income of the individual or coparcener who made the transfer, potentially increasing their tax liability. While HUFs are designed to manage ancestral property and its income, throwing personal property into the HUF is treated as a diversion of income, leading to this clubbing. The succession of the Karta role typically passes to the next eldest male member.

rama krishnan

12244 Points Posted on 01 November 2022

There's no limit but the income generated out of transferred fund would be clubbed in the hands of individuals or coparcener

ashok oza

292 Points Posted on 02 November 2022

Thank you, sir Rama Krishnan.

So, sir Rama Krishnan, does that mean Karta's (or Coparsner's) tax liability goes up, even if separate tax returns for HUF entity are being filed ? And, while filling returns, how the funds (or incomes generated there of), in HUF are shown separately.? I thought, the very purpose of HUF is not to increase tax liability of Karta or Coparsner's. Pl. Oblige by giving elaborate clarification, sir. Thank you.

rama krishnan

12244 Points Posted on 02 November 2022

Sir huf is created to manage the ancestral property and income generated out of such property since the income cannot be attributed to a single person such as karta being eldest male member and his sons and daughters being coparceners. so the income generated out of such ancestral property only will be taxed in hands of huf. the karta and coparcener are free to throw their property in the common hub of huf. however it's treated as diversion of income and hence the income generated out of such property would be clubbed in the hands of respective karta and coparcener

ashok oza

292 Points Posted on 02 November 2022

Thank you Sir RK. You've mentioned "throwing of *Property*, by HUF members, in the common hub of HUF." Are the Cash Transfers also treated as "Diversion" of income? One more query, sir! In the event of Karta's demise, is the succession (of Karta) automatic, to female spouse or "Karta-Nominated" daughter ??